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Aug. 28, 2015, 11:10 AM
- There's plenty of precedent for the recent market action, says Morgan Stanley's Adam Parker, noting the market has dropped more than 5% 16 times since March 2009, and each time has moved on to new highs.
- His half-glass view is that the economy is in the middle of its longest expansion ever, and a less-active Fed, a nervous consumer maybe saving more, a lower oil price, and a flattish dollar all argue for continued expansion.
- Morgan's top ideas to buy on the pullback: AGN, AMZN, AAPL, AVGO, BAC, BKU, DAL, GILD, GOOG, GOOGL, HLT, JPM, KR, LEN, LMCK, MGA, MBLY, NWL, QCOM, SABR, CRM, SBAC, SBUX, BX, TMO, VRSK, WWAV, XL.
Aug. 24, 2015, 7:08 PM
- Two weeks after Northland Securities predicted Intel (NASDAQ:INTC) will have a ~50% iPhone 6S modem share, Raymond James' Hans Mosesmann reports "multiple [Silicon] Valley datapoints" suggest Intel will take iPhone share in 2016, not 2015, via its XMM 7360 4G modem.
- Mosesmann: "At IDF, the Street got the opportunity to meet newly promoted GM of the Communications and Devices Group, Aicha Evans, who refreshingly and bluntly told the audience of analysts and investors that if Intel couldn’t get to scale in modems, it would basically be done. Our sense is that she knows it will have scale and Apple is that avenue."
- Cowen's Tim Arcuri also doubts Intel will take 6S share from Qualcomm (NASDAQ:QCOM) in 2015, but leaves the door open to other wins. "[F]ield work with carriers and otherwise suggests QCOM will keep thin [modem] for 6S and 6S+. While we believe INTC has been evaluated for 6C (the 4″ model expected in CQ1:16), checks w/carriers and otherwise still do not support a new premium-tier modem – the addition of which would require at least 9 months of extensive testing (lab, interoperability, etc.) to get approval from the large US carriers."
- He adds checks also suggest Samsung will use both Qualcomm's Snapdragon 820 app processor and its own Exynos processors in the Galaxy S7, after using only the Exynos 7420 in the Galaxy S6. Recently-leaked Samsung docs suggest the 820 is being tested by Samsung with the S7.
- VentureBeat reported earlier this year Apple plans to use Intel 4G modems in 2016 iPhones aimed at emerging markets. Meanwhile, Digitimes has reported Qualcomm is "partnering with TSMC to supply 100% of the modem chips for use in the new iPhones slated for launch in September 2015."
- Qualcomm fell 4% today amid a 3.8% Nasdaq drop. Intel fell 1.2%.
Aug. 14, 2015, 11:58 AM
- Qualcomm (QCOM +0.1%) has sold its L-Band (1452MHz.-1492MHz.) U.K. spectrum to Vodafone (NASDAQ:VOD) and Three's U.K. subsidiaries. The Times reports total proceeds are expected to be above £100M ($156M).
- Qualcomm announced in June it would sell the spectrum, following an EU decision allowing the L-Band to be used for mobile downlink capacity. The company paid just £8.3M ($12.9M) in 2008 to buy the spectrum.
Aug. 12, 2015, 12:39 PM
- "We now believe that Intel (INTC +0.9%) will capture roughly 50% of Apple’s modem business in the upcoming iPhones due to launch September 9th," writes Northland Securities' Gus Richard. "[W]e estimate that this win could represent $750M to $1.25B in revenue for Intel in . This is a marque win for Intel and would go a long way to reducing the mobile business losses."
- At the same time, Richard is concerned Alibaba plans to deploy ARM-based (ARMH -3.3%) server CPUs developed by Cavium (CAVM -1.7%), and reports hearing Amazon, Facebook, and Google are working on their own ARM server CPU designs. Major Web/cloud service providers currently rely overwhelmingly on Intel server CPUs (primarily Xeon).
- Qualcomm (QCOM -0.9%) has been the iPhone's exclusive baseband modem supplier for some time, and also sells complementary RF transceiver, power management, receive-only, and envelope-tracking ICs to Apple. VentureBeat reported in March Apple plans to use Intel modems in 2016 iPhones aimed at emerging markets.
- Qualcomm suggested last month Apple's high-end smartphone share gains were partly responsible for its soft FQ4 (calendar Q3) guidance. However, this was generally seen as a reference to the fact Apple uses home-grown app processors (the A-series) within the iPhone rather than Qualcomm's Snapdragon line. The company has dominated the 4G modem market to date, and is generally seen as having a high-end performance/power consumption edge.
- Separately, Qualcomm has unveiled its next-gen GPU core architecture, the Adreno 5xx. Qualcomm promises up to 40% improvements in performance and power draw relative to the prior-gen Adreno 430. The first GPUs based on the architecture will go into the company's upcoming Snapdragon 820 (next-gen flagship) and 620/618 (mid-range) processors.
- Intel is up modestly in spite of a 1% Nasdaq drop. Qualcomm is following markets lower.
Aug. 10, 2015, 7:06 PM
- Leaked documents suggest Samsung is testing the use of Qualcomm's (NASDAQ:QCOM) Snapdragon 820 baseband/app processor (the company's next-gen flagship) with the Galaxy S7 (expected in early 2016).
- Re/code reported in April the 820 will be made by Samsung, rather than mainstay Qualcomm foundry partner TSMC. Samsung's decision to exclusively use its Exynos 7420 app processor with the Galaxy S6, after making heavy use of the Snapdragon 801 and 805 with the Galaxy S5, has weighed on Qualcomm's 2015 chip sales.
- The 820, previewed in March at the Mobile World Congress, will feature Qualcomm's next-gen Kryo CPU core, and also leverage its Zeroth neural networking processor IP. Assuming Samsung is the manufacturer, the chip is likely to be produced using Samsung/GlobalFoundries' 14nm FinFET (3D transistor) manufacturing process.
Aug. 6, 2015, 9:53 AM
- Qualcomm (QCOM -0.5%), via its Atheros Wi-Fi/connectivity chip unit, is buying DSL modem/infrastructure IC and home gateway processor vendor Ikanos (NASDAQ:IKAN) for $2.75/share, or roughly $47M based on Ikanos' Q2 diluted share count. The price represents a 57% premium to Ikanos' Wednesday close. The deal is expected to close by year's end.
- Ikanos' products complement Qualcomm/Atheros home Wi-Fi and wireline networking offerings. Qualcomm: "The combination of Qualcomm Atheros' broad home gateway IP portfolio, including Wi-Fi, powerline, small cell, and Ethernet switch technologies, and Ikanos' advanced wired modem technology, is designed to create a complete solution for a wide range of home gateway products to better serve the carrier segment." Broadcom (NASDAQ:BRCM) and Marvell (NASDAQ:MRVL) are among the other companies competing in this space.
- Qualcomm CEO Steve Mollenkopf suggested last week his company would make new chip acquisitions.
Jul. 31, 2015, 10:44 AM
- ParkerVision (NASDAQ:PRKR) states a federal appeals court (the CAFC) has affirmed a 2014 district court ruling declaring the company didn't prove Qualcomm (NASDAQ:QCOM) infringed its patents.
- The court has also "upheld the district court's decision denying Qualcomm's judgement as a matter of law ("JMOL") motion for invalidity with regard to claim 27 of [ParkerVision's] '518 patent but reversed the district court's decision with regard to Qualcomm's JMOL for invalidity on the remaining claims in the case."
- CEO Jeffrey Parker: "We are highly disappointed with the appellate court's decision both with regard to infringement and validity of certain of our patent claims. Despite this setback, we will consider further options on appeal, and will move forward in our second infringement case against Qualcomm, HTC and Samsung."
- ParkerVision nosedived prior to the company's official announcement, and was subsequently halted. Shares plunged in May after the CAFC heard oral arguments for ParkerVision's appeal.
- Update (11:54AM ET): ParkerVision is down 38% after coming off a halt.
Jul. 29, 2015, 1:27 PM
- "Qualcomm (QCOM +0.2%) is very likely to be some form of actor in the consolidation of the semiconductor industry," CEO Steve Mollenkopf tells Bloomberg. “The timing of which is always the debate.”
- The remarks come a week after Qualcomm said it would (following pressure to do so from Jana Partners) consider a breakup, along with other strategic options. There has been some speculation Qualcomm's chip unit (QCT) could merge with Intel (has been seeing heavy mobile division losses) following a spinoff; antitrust regulators would closely vet such a deal. Others have argued Qualcomm could by an RF chipmaker such as Skyworks or Qorvo, or (with the goal of expanding into the data center) acquire an ARM server CPU developer.
- Qualcomm hasn't exactly been averse to M&A in recent years. Noteworthy acquisitions since 2011 include Atheros (Wi-Fi chips), Wilocity (WiGig chips), and CSR (Bluetooth/Wi-Fi chips).
- Update: Some other Qualcomm news of interest: Mollenkopf discloses he bought 15,815 shares yesterday at $63.31, and CFO George S. Davis discloses he bought 8,100 shares yesterday at $62.34.
Jul. 27, 2015, 1:25 PM
- Believing EPS can rise to $6.54 from an expected FY15 level of $4.63 (down from FY14's $5.27), Morgan Stanley's James Faucette has upgraded Qualcomm (QCOM +1.3%) to Overweight a few days after shares sold off on account of the FQ4 guidance provided with the company's mixed FQ3 results and job cut/strategic review announcement.
- Faucette is optimistic Qualcomm can maintain a competitive edge in the merchant baseband/app processor market in spite of major job cuts, particularly given Intel has been slashing capex and recently pushed out its 10nm CPU ETA to 2H17. "We believe that the push by Qualcomm to close the [process] geometry gap with Intel has been a key driver of the annualized [cost of goods sold] + R&D increase of ~$7B over the last 4 years."
- He also sees several potential EPS growth drivers, including regained app processor share at Samsung, Chinese 3G/4G growth, improved Chinese royalty capture, and the closing of the CSR deal (expected to be accretive). Concerns about lower 4G/5G royalty rates relative to 3G rates are downplayed. "These devices may carry a lower royalty rate, but if they include 3G connectivity, we believe Qualcomm is entitled to collect the full 3G royalty rate."
- At the same time, Faucette is skeptical Qualcomm will spin off its chip unit (QCT) from its IP licensing unit (QTL). "We think chipset sales from the QCT segment create an easier path to collecting royalties in QTL. If the businesses are separated ... so too does this enforcement mechanism." Others have also noted QCT creates IP that's subsequently licensed by QTL, and that QTL lowers QCT's royalty bill for 3rd-party chip IP.
Jul. 24, 2015, 4:07 AM
- With the possibility of a Qualcomm (NASDAQ:QCOM) split afloat, an interesting piece of analysis has surfaced on Wall Street, pointing towards Intel (NASDAQ:INTC) as the best possible beau if the firm decides to break itself up.
- "The chip deal to end all chip deals," said Cowen analyst Timothy Arcuri.
- Other suitors for Qualcomm's chip business, valued at $30B-$40B, could include a consortium backed by the Chinese government and Samsung Electronics (OTC:SSNLF).
Jul. 22, 2015, 4:51 PM
- Qualcomm's (NASDAQ:QCOM) strategic realignment plan aims to reduce annual spending by $1.4B. In addition to cutting 15% of its workforce, the company plans to lower costs by reducing annual stock compensation grants by $300M.
- Confirming a recent WSJ report, Qualcomm adds it plans a review of its corporate/financial structure that includes "possible business separation alternatives" - presumably a reference to a potential split of QCT (chips) from QTL (licensing). Further capital returns and "other potential strategic and financial alternatives" will also be weighed. The review is expected to be finished by year's end.
- As part of a deal with activist Jana Partners, Qualcomm has added two Jana-backed directors, Mark McLaughlin and Tony Vinciquerra, and plans to add another independent director. Donald Cruickshank won't stand for board re-election at the 2016 annual meeting; Raymond Dittamore won't stand at the 2017 meeting.
- Qualcomm, which has a history of making big investments in non-core ventures (FLO TV, Globalstar, etc.), also says it's "reducing its investments outside of QTL and QCT and will focus these investments around the highest-return opportunities, including data centers, small cells and certain IoE verticals."
- Guidance: Discussing its light FQ4 guidance (revenue is expected to be down 25%-40% Y/Y), Qualcomm notes chip sales continue to be impacted by "increased concentration in the premium tier" - a reference to iPhone share gains - as well as lower high-end chip sales from "a vertical customer" (presumably Samsung) and lower Chinese sell-through of certain phones containing high-end chips.
- In addition, royalty revenue continues to be impacted by Chinese under-reporting (in spite of the February settlement). Qualcomm thinks "it will take time" to finish negotiations with certain Chinese OEMs. The company's FY15 (ends in September) forecast for reported 3G/4G device sales has been cut to $253B-$259B from $255B-$275B.
- MSM shipments: 225M MSM chips were shipped in FQ3, flat Y/Y and towards the high end of a 210M-230M guidance range. However, shipments are expected to fall to 170M-190M (-19%-28% Y/Y) in FQ4.
- Key numbers: QCT revenue fell 22% Y/Y in FQ3 to $3.85B; op. profit fell 74% to $289M. QTL revenue rose 7% to $1.93B; op. profit rose 7% to $1.65B. $5.4B was spent to buy back 63.7M shares. Qualcomm ended FQ3 with $35.2B in cash/investments, and $10.9B in debt.
- After initially rising, shares have fallen to $62.75 AH.
- FQ3 results/FQ4 guidance, PR
Jul. 22, 2015, 4:07 PM
- Qualcomm (NASDAQ:QCOM): FQ3 EPS of $0.99 beats by $0.04.
- Revenue of $5.83B (-14.4% Y/Y) misses by $20M.
- Expects FQ4 revenue of $4.7B-$5.7B and EPS of $0.75-$0.95, below a consensus of $6.13B and $1.08.
- Cutting 15% of workforce via strategic realignment plan.
- Shares +1.9% AH.
- Update: Qualcomm finished AH trading down 1.3%.
Jul. 21, 2015, 5:35 PM| Jul. 21, 2015, 5:35 PM | 5 Comments
Jul. 20, 2015, 9:50 PM
- Shortly after The Information reported major layoffs are planned, the WSJ reports Qualcomm (NASDAQ:QCOM) is "expected to conduct a sweeping strategic review that will look at the possibility of a breakup." Board changes are also reportedly being considered.
- The WSJ adds Qualcomm might announce it's considering a breakup and other options, such as bigger capital returns, when it posts FQ3 results on Wednesday afternoon. It cautions the company's plans are "in flux." Qualcomm has already launched huge buybacks, and even tapped debt markets to help finance them.
- In April, activist Jana Partners called on Qualcomm to consider spinning off its chip unit (QCT) from its IP licensing unit (QTL). Chairman Paul Jacobs stated in late June the company has no such plans. There's speculation a spun-off QCT would participate more aggressively in the chip industry's M&A wave.
- Qualcomm finished AH trading up 2.7% to $65.53.
Jul. 20, 2015, 4:53 PM
- Ahead of Wednesday's FQ3 report, The Information reports Qualcomm (NASDAQ:QCOM) is planning to announce layoffs this week, and that the cuts could impact over 10% of its 30K-strong workforce. For its part, Fudzilla has reported Qualcomm could lay off ~4K workers.
- The reports come in a fiscal year that has seen Qualcomm's sales pressured by a Chinese antitrust probe (settled in February) and related licensee non-payments, Apple's high-end share gains (affects app processor sales and high-end royalty rates), and Samsung's decision to exclusively use its Exynos 7420 app processor in the Galaxy 6. The FY15 (ends in September) revenue growth consensus is at -2%, and the FY16 consensus at +1.8%.
- Qualcomm has already carried out smaller layoffs under CFO George S. Davis (took over in 2013). The company's R&D spend only rose 2% Y/Y in FQ2, and its SG&A spend fell 1%.
Jul. 16, 2015, 5:03 AM
- European Union regulators have launched twin investigations against Qualcomm (NASDAQ:QCOM), the latest crackdown by the EU on a U.S. tech giant.
- The first investigation will examine whether the company offered discounts to customers on condition they bought chipsets exclusively from Qualcomm.
- The second will look at whether the firm engaged in predatory pricing tactics by setting prices below their costs to squeeze out competitors.
Qualcomm Inc develops digital communication technology called CDMA (Code Division Multiple Access), & owns intellectual property applicable to products that implement any version of CDMA including patents, patent applications & trade secrets.
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